Court decision may be fiscal boost for Buffalo and Niagara Falls

A U.S. District Court ruling against the Seneca Nation of Indians should bring more revenue to Buffalo and Niagara Falls while they combat budget challenges.

Judge William M. Skretny issued a decision Friday rejecting the Senecas' appeal of a previous arbitration ruling and ordering the tribe to pay New York State hundreds of millions of dollars in casino revenues it owed host municipalities as part of a 2002 compact. A three-person arbitration panel had ruled in January that Seneca Nation was wrong to halt casino revenue-sharing payments in 2017 to Buffalo, Niagara Falls and Salamanca.

Andrew Harrer/Bloomberg

"The court confirmed what we've said all along: the Seneca Nation needs to fulfill their obligations, make their neighbors and the state whole, and pay what they owe in exchange for their exclusive gaming rights," Rich Azzopardi, senior adviser to New York Gov. Andrew Cuomo, said in a statement. "It is our hope that they end this charade, stop using the courts to delay, and pay what they owe."

In January, after the arbitration ruling against the Senecas, Moody’s Investors Service issued a report calling the development a credit positive for the cities of Buffalo, Niagara Falls and Salamanca because it requires all back payments along with future revenue until the compact expires in 2023. The 2002 casino agreement was forged when New York State awarded the Seneca Nation exclusive rights to operate three casinos in Western New York in exchange for up to 25% of slot machine revenues to be split between the host localities and the state.

Moody’s analyst Robert Weber noted in January that Niagara Falls is most heavily reliant on Seneca Nation revenue-sharing funds with the city’s annual operating budget including roughly $13 million in tribal payments for around 14% of total revenues. Lost casino revenues have created budget challenges for Niagara Falls, which resulted in Moody’s downgrading the tourist city next to the Canadian border by one notch to Baa3 with a negative outlook in October 2017. New York State pledged a one-time $12.3 million payment to Niagara Falls last year to offset the disputed casino revenue sharing losses.

Buffalo previously received around $7 million annually from Seneca casino payments compromising around 1.7% of the city’s overall budget. New York State’s second largest city has faced challenges achieving structural balance with its budget after missing revenue targets from 2017 to 2019. The city was downgraded by Fitch Ratings to A-plus from AA-minus in September due largely to “overly optimistic revenue assumptions” during the past few years.

“We hope that today’s ruling ends the Seneca Nation’s attempts to delay payments owed to the State and the City, that we can resume a mutually beneficial working relationship with the Seneca Nation and that the millions of dollars owed to Buffalo and its residents are paid quickly, so that our City’s excellent financial position can no longer be questioned,” Mayor Byron Brown said in a Nov. 8 statement.

The Senecas had claimed that terms of the 2002 compact requiring annual revenue payments ended at the end of 2016. The arbitration panel found in its 2-1 decision that the tribe’s payment agreement was automatically renewed for seven years in December 2016.

Seneca Nation of Indians president Rickey Armstrong Sr. released a statement Friday saying that the tribe will review the decision before deciding how to proceed.

“We understood the reality that the arbitration and court proceedings may not ultimately uphold the language of the Compact as written,” Armstrong said. “Yet, it is our obligation to defend our agreements, so they are not compromised for the benefit of others.”